Russia's Putin says military escalation won't solve Ukraine crisis

MINSK (Reuters) - Russian President Vladimir Putin said on Tuesday the crisis in Ukraine could not be solved by a further military escalation or without dialogue with representatives of the country's Russian-speaking eastern regions.

"We are convinced that today, (the Ukraine crisis) cannot be solved by further escalation of the military scenario, without taking into account vital interests of the south-eastern regions of the country and without a peaceful dialogue with its representatives," Putin said.

Speaking at a high-level meeting in Minsk, which includes Ukrainian President Petro Poroshenko, Putin also said the Russian economy could suffer a loss of some 100 billion roubles ($2.77 billion) if European Union goods reach Russia via Ukraine, bypassing the tariffs Russia levies on EU goods.

"Russia cannot remain idle in such a case and we will simply be forced to take decisive measures to protect our market," he said, adding that would include reversing trade preferences for imports from Ukraine.

He said that Belarus and Kazakhstan, Moscow's partners in a customs union, would also be affected.

Putin, Poroshenko and other leaders are meeting in Minsk over the conflict in Ukraine, which has killed more than 2,000 people and prompted a round of sanctions that are hurting both European and Russian economies.